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    • NANOTECHNOLOGY» Navigating the Nanotechnology Patent Thicket As manufacturers harness nanotechnology for their medical devices, they should be aware of the need for a patent-licensing strategy. Steven Yu U ndoubtedly, nanotechnology in- novations will offer many breakthrough solutions for the next generation of medical devices. But what are the major obstacles to using nanotechnology in medical devices? Aside from the technical challenges, some of the more well-known obstacles are the regulatory hurdles and safety concerns about nanoscale materials. Perhaps less well known is the patent thicket that has developed in this technology area. Medical device companies seeking to implement nano- technology in their products need to be aware of the emerging intellectual property trends in nanotechnology. The Nanotechnology Patent Landscape Over the past decade, universities and companies have been engaged in an intense race to patent their nano- 5 I technology inventions, seeking a source "- YO o of future licensing revenue and control ~ of an emerging technology. But this E c o ~ ;; Steven Yu, MD, is a patent attorney in ~ the Asian Practice Group at Kenyon Patenting nanotechnology can be tricky because of its multidisciplinary nature. Shown & Kenyon LLP (Washington, DC). here is a rendering of translucent medical nanobots fixing blood cells. 72 MD&DI • devicelink com/mddi • November 2007
    • NANOTECHNOLOGY» database for nanotechnology-related items returned more than 4700 patents 1000 with claims containing the following 900 terms: nanomaterial, nanostructure, "C <II 800 nanofiber, nanowire, nanop article, ::::I III fullerene, quantum dot, nanotube, den- ~ 700 - III - c <II 111 e, 600 500 drimer, or nanocrystal (see Figure 1). This thicket of patents can partially be attributed to the complex nature of - ... 0 <II .c 400 300 nanotechnology itself and to the fact that much of the field is the result of E cumulative innovation, where innova- ::::I 200 tions build on many previous innova- z 100 tions. Because multiple patents from competing groups may cover each in- 0 -0 e-- 00 0- o •... N M ~ It') -0 cremental innovation to some degree, 0- 0- 0- 0- o o o o o o o •... 0- •... 0- •... 0- •... 0- o o o o o o o a large number of overlapping patents N N N N N N N is inevitable as complex technologies Year become commercialized. A glance at the businesses that hold the most nanotechnology patents gives Figure 1. The number of nanotechnology patents issued in the United States has in- us some initial impressions about the creased nearly tenfold in the last 10 years. patent landscape (see the sidebar, "Top nanotechnology land grab has resulted patent rights in nanotechnology. As of Five Nanotechnology Patent Hold- in what many consider to be a patent July 2007, a search of the u.s. Patent ers"). One notable observation is that thicket-a dense web of overlapping and Trademark Office (PTO) patent large companies in the semiconductor and electronics industries dominate nanotechnology patenting. Although much nanotechnology innovation may take place in these particular indus- tries, it is important to keep in mind that nanotechnology is fundamentally a multidisciplinary field that overlaps a wide range of scientific and technical disciplines (materials science, biotech- nology, synthetic chemistry, electrical engineering, and physical chemistry, to name a few). Therefore, a patent on a basic nano- technology platform that was origi- nally developed for one industry can affect other industries as well. For ex- ample, a technology originally devel- oped to create nanostructures in semi- conductor microchips may also be used to create nanostructures for microelectromechanical system-based medical devices. A patent on this nano- Slippery technology platform, in addition to covering the semiconductor applica- tion, could also cover the medical de- When vice application even if it was not fore- seen. For a medical device company, Wet this means that relevant nano- technology patent owners are not nec- essarily in the life science and health- care industries-and that there are potentially more players in the field than at first glance. 74 MD&DI • devicelink.com/mddi • November 2007
    • Another notable observation is the :musually large stake that universities TOP FIVE ve in nanotechnology. By one esti- NANOTECHNOLOGY ate, about 20% of nanotechnology PATENT HOLDERS 1 atents are owned by universities, a .:lisproportionately large number con- 1. IBM sidering that universities typically hold about 1-2 % of the patents issued in 2. Canon die United States each year.! But even 3. Hitachi this figure may underestimate the sig- nificance of university-owned nano- 4. University of California :echnology patents. Because these • atents often emerge from basic sci- 5. Olympus Optical ence research, it is likely that university- owned patents protect the core . uilding blocks that are needed to im- egy. When licensing a nanotech plat- plement downstream nanotechnology form to incorporate into a medical de- applications. vice, device firms must always consid- er whether any other patents owned Risk-Assessment Strategies by third parties might restrict the pro- Having a comprehensive view of the posed use of nanotechnology in the patent landscape is vital to operating product. This type of question is typi- in the nanotechnology space because cally answered through a product multiple patents from different clearance investigation (also called a sources may need to be licensed to right to use or freedom to operate), bring medical devices using nan- which involves a search of patent otechnology to market. databases and an analysis of relevant A nanotechnology-based medical patents. device will probably implement rnul- Although a comprehensive clearance tiple layers of nanotech platforms. search incorporates multiple search Take, for example, a hip implant with strategies, manufacturers can conduct a nanocomposite coating designed to a preliminary patent search on the improve tissue regeneration around database available at the PTO Web site the implant. In addition to licensing (www.uspto.gov) using potential key- the nanocomposite coating from the words. A search within the PTO nan- supplier, the raw nanomaterial com- otechnology classification (Class 977) ponent of the coating may need to be may also be helpful, but the results licensed from another patent holder, may be limited because this classifica- and the technique for applying the tion was only recently created. Device coating to the medical device may firms can further analyze potentially need to be licensed from yet another relevant patents identified by the patent holder. search to determine whether there are The obstacles presented by this indeed blocking patents, and if so, patent thicket should be addressed whether the patents are valid. Some- early in the product development cycle times a patent is invalid because of a before a firm spends a significant prior publication, such as a scientific amount of money on developing a article disclosing the claimed inven- nanotechnology-based medical device. tion, that was not considered by the A well-planned licensing strategy can PTO during the examination process. help manufacturers avoid a situation If a blocking patent is believed to be in which a company licenses one set of invalid, manufacturers can challenge patents to develop a product only to its validity through a patent reexami- learn later on that more patents need to nation request. be licensed. Anti-Royalty Stacking. If licensing Survey the Patent Landscape. In a a nanotechnology patent, consider hav- field that is dominated by patents, due ing the patent owner share some of diligence and a proper survey of the the risk posed by an uncertain patent patent landscape are critical to a suc- landscape. One way to do this is to in- cessful nanotechnology licensing strat- sist on an antis tacking provision in the -~--_ •.•'n"n~hQr ?nn7 • d e vir- rsl i n k rnm/mrlrli • MD&DI 75
    • Another notable observation is the unusually large stake that universities TOP FIVE have in nanotechnology. By one esti- NANOTECHNOLOGY mate, about 20% of nanotechnology PATENT HOLDERS' patents are owned by universities, a disproportionately large number con- 1. IBM sidering that universities typically hold about 1-2% of the patents issued in 2. Canon the United States each year.! But even 3. Hitachi this figure may underestimate the sig- nificance of university-owned nano- 4. University of California technology patents. Beca use these patents often emerge from basic sci- 5. Olympus Optical ence research, it is likely that university- owned patents protect the core building blocks that are needed to im- egy. When licensing a nanotech plat- plement downstream nanotechnology form to incorporate into a medical de- applications. vice, device firms must always consid- er whether any other patents owned Risk-Assessment Strategies by third parties might restrict the pro- Having a comprehensive view of the posed use of nanotechnology in the patent landscape is vital to operating product. This type of question is typi- in the nanotechnology space because cally answered through a product multiple patents from different clearance investigation (also called a sources may need to be licensed to right to use or freedom to operate), bring medical devices using nan- which involves a search of patent otechnology to market. databases and an analysis of relevant A nanotechnology-based medical patents. device will probably implement mul- Although a comprehensive clearance tiple layers of nanotech platforms. search incorporates multiple search Take, for example, a hip implant with strategies, manufacturers can conduct a nanocomposite coating designed to a preliminary patent search on the improve tissue regeneration around database available at the PTO Web site the implant. In addition to licensing (www.uspto.gov) using potential key- the nanocomposite coating from the words. A search within the PTO nan- supplier, the raw nanomaterial com- otechnology classification (Class 977) ponent of the coating may need to be may also be helpful, but the results licensed from another patent holder, may be limited because this classifica- and the technique for applying the tion was only recently created. Device coating to the medical device may firms can further analyze potentially need to be licensed from yet another relevant patents identified by the patent holder. search to determine whether there are The obstacles presented by this indeed blocking patents, and if so, patent thicket should be addressed whether the patents are valid. Some- early in the product development cycle times a patent is invalid because of a before a firm spends a significant prior publication, such as a scientific amount of money on developing a article disclosing the claimed inven- nanotechnology-based medical device. tion, that was not considered by the A well-planned licensing strategy can PTO during the examination process. help manufacturers avoid a situation If a blocking patent is believed to be in which a company licenses one set of invalid, manufacturers can challenge patents to develop a product only to its validity through a patent reexami- • learn later on that more patents need to nation request. be licensed. Anti-Royalty Stacking. If licensing Survey the Patent Landscape. In a a nanotechnology patent, consider hav- field that is dominated by patents, due ing the patent owner share some of diligence and a proper survey of the the risk posed by an uncertain patent patent landscape are critical to a suc- landscape. One way to do this is to in- cessful nanotechnology licensing strat- sist on an antis tacking provision in the November 2007 • devicelink.com/mddi • MD&DI 75
    • NANOTECHNOLOGY» ~ licensing agreement to prevent royalty patents, which can then be licensed as stacking. This stacking arises when a package. A patent pool can poten- several parties who own overlap- tially have all the patents required to ping patent rights demand royal- practice a particular technology. ty payments for use of their tech- Therefore, an effective patent nologies in the product that you pool can provide the convenience wish to bring to market (i.e., of one-stop shopping for poten- the royalties stack up on each tial license users and prevent other). manufacturers from licensing a An antis tacking provision subset of patent rights that are requires the licensing patent useless without other comple- holder to share some of the fi- mentary rights. nancial burden. A typical pro- For medical device companies, vision states that the royalty rate patent pools may be the most at- payable to the patent owner will tractive option for avoiding the be reduced if other third-party li- high cost of the fragmented and con- censes are required for a given product. fusing nanotechnology patent land- One method used to reduce the total scape. However, creating a successful royalty burden is to include a clause pool takes considerable effort and co- that the royalty rate will be reduced by operation among multiple parties. a percentage (one half, for example) of technology pa tent thicket. Cross- Parties must agree on the many as- the second royalty rate. For example, if licensing is the mutual sharing of pects of how the patent pool will a first-obtained license has a royalty patents between patent holders that work, such as the relative value of rate of 7% and a subsequent license grant each the right to practice the each patent contributed, the identifi- has a royalty rate of 4%, the adjusted other's patents, which may range from cation of essential patents, and the royalty rate for the first license would as few as two patents (one from each formula for distributing the royalty be: 7% - (4% x 0.5) = 5%. of the parties) to an entire portfolio of dividends. They must also agree on Indemnification. Another way to patents. Cross-licensing is the pre- the overall royalty rate, along with have the licensing patent owner share ferred means by which competing the other terms under which the pool the risk of an uncertain patent land- companies clear blocking patent posi- will be licensed to interested parties. scape is to include an indemnification tions among themselves, and often, It remains to be seen whether licens- clause in the licensing agreement. In these cross-licenses involve no running ing managers at the universities and such an agreement, the licensing patent royalties. But again, due to the multi- companies that hold key nano- owner agrees to defend the license user disciplinary nature of nanotechnology, technology patents would be willing to from patent infringement claims by third parties. From a risk-allocation perspective, this arrangement makes Collaboration by nanotechnology patent owners sense because the patent owner is like- ly to be more aware of the activities of through cross-licensing and patent pools may be the competing third parties that are devel- oping similar technologies, and thus, most effective way to cut through the nanotechnology the patent owner is in a better position patent thicket. to know of potentially overlapping patent rights. However, obtaining indemnification the relevant patent holders may not be forgo unilateral licensing efforts and from the licensing patent owner is usu- competitors in the medical device in- engage in patent pools instead. ally difficult. The best way to prepare dustry and, therefore, may have little Patent Reexamination. If a device for indemnification negotiations is to interest in exchanging patents with a firm doubts the validity of a blocking properly assess the level of risk posed device company. As such, cross- patent, PTO's patent reexamination by the patent landscape. The more the licensing may not be the best strategy procedure can be used as a lower-cost license user knows about the potential for device firms to resolve patent dis- alternative to litigation for challenging threat of third-party patents, the more putes in nanotechnology. the patent's validity. Some recent high- leverage the license user will have in Patent pools are another form of co- profile reexamination cases (such as negotiations. operation among different patent own- the ones involving RIM's Blackberry, Patent Pools and Cross-Licensing. ers. Pools are particularly useful when eBay's "Buy It Now" feature, and the Collaboration by nanotechnology there are many different players. In a University of Wisconsin's stem cells) patent owners through patent pools patent pool, two or more patent own- have put this once little-known proce- or cross-licensing may be the most ef- ers combine their patents into a pool to dure into the public spotlight and fective way to cut through the nano- establish a clearinghouse for related demonstrated the role it can play in a 76 MD&DI • devicelink com/mddi • November 2007
    • Just What defensive patent strategy. ilarly to the ex parte process, and like PTO offers two types of reexamina- tions: ex parte and inter partes. In ex ex parte reexaminations, more than 90% of requests are granted by PTO. the Doctor parte reexaminations, which are used far more frequently, the patent chal- The main difference in a inter partes reexamination is that the challenger is Ordered lenger is allowed to remain anony- allowed to actively participate in the mous. Therefore, the challenger can re- process by submitting rebuttals to quest a reexamination to test the statements made by the patent owner. Expand your medical validity of a blocking patent early in Also, unlike ex parte reexaminations, tubing operations with the product development stages before, the challenger's identity is revealed to investing substantial time and money. the patent owner. precision equipment from The challenger must submit in its re- The challenger's active participation quest a "substantial new question of may explain the higher success rate in the post-extrusion leader. patentability" based on another patent inter partes reexaminations-86% as or a printed publication. Statistical of September 2006. If an inter partes data published by PTO indicate that reexamination is successful, all claims • From precise tapered tubing to more than 90% of reexamination re- in the patent are canceled, effectively repeatable straight tubing RON quests are granted. extinguishing the patent. has a solution that will increase Once PTO grants a reexamination, One of the potential disadvantages your line's productivity. the patent owner is given the option of of inter partes reexamination, how- filing a response. The challenger then ever, is that the challenger is not al- has two months to reply to the patent lowed to use the same arguments, or owner's response if one is filed. (But to even arguments that could have been • Every piece of RON equipment avoid giving the challenger this oppor- made, to challenge the patent in any is designeq and built for reliability tunity, the patent owner will often de- subsequent court litigation (an estop- and precision. We back cline to file a response.) This is the ex- pel). But this problem is largely miti- th is with service that tent of the challenger's participation in gated by the fact that the challenger is second to none. the reexamination process; the re- can appeal any unfavorable inter mainder of the reexamination takes partes reexamination decisions to the place between the examiner and patent PTO board and subsequently to the owner only. The challenger's limited Federal Circuit court. • Our expert engineering staff participation is one of the major dis- delivers turnkey solutions advantages of the ex parte reexamina- Conclusion to help you bring quality tion method. In a field that is crowded with over- products to market faster. After these opening exchanges, much lapping intellectual property rights, of the reexamination procedure fol- medical device companies seeking to lows the general rules governing the incorporate nanotechnology into their examination of patent applications. products face potentially costly and • Customizing our machines However, there are two major differ- messy patent disputes. Successfully to fit your needs lets you ences that subject the patent to a high- na viga ting through the nano- get a jump on er level of scrutiny than that applied in technology patent thicket will require the competition. an ordinary examination. First, a three- an understanding of the patent land- member PTO panel reviews the deci- scape and a well-planned licensing sions at key points in the reexamina- strategy. In some cases, a patent reex- tion process. Second, reexaminations amination procedure can be a cost- For more information are assigned to a special corps of high- effective way to clear or weaken the call 630.893.4500 ly skilled patent examiners who work threat of a blocking patent. solely on reexaminations. or visit www.rdnmfg.com At the conclusion of a reexamina- References tion, PTO issues a decision that can- 1. B Mouttet, "Nanotechnology and U.S. cels any claims that are found un- Patents: A Statistical Analysis," Nano- patentable, confirms patentable technology Law & Business 3, no. 3 claims, and makes any necessary (2006): 309-316. changes to the claims. According to 2. ]S Baughman, "Reexamining Reexamina- one study, almost 75% of ex parte re- tions: A Fresh Look at the Ex parte and manufacturing co., inc. examinations result in the cancella- Inter partes Mechanisms for Reviewing Is- tion or modification of at least some sued Patents," Journal of the Patent and of the claims.2 Trademark Office Society 89, no. 5 (2007): Increased The inter partes process works sim- 349-363 .• Productivity November 2007 • devicelink com/mddi • MD&DI Starts Here
    • NANOTECHNOLOGY» Navigating the Nanotechnology Patent Thicket Asmanufacturers harness nanotechnology for their medical devices, they should be aware of the need for a patent-licensing strategy. Steven Yu ndoubtedly, nanotechnology in- U novations will offer many breakthrough solutions for the next generation of medical devices. But what are the major obstacles to using nanotechnology in medical devices? Aside from the technical challenges, some of the more well-known obstacles are the regulatory hurdles and safety . concerns about nanoscale materials. Perhaps less well known is the patent thicket that has developed in this technology area. Medical device companies seeking to implement nano- technology in their products need to be aware of the emerging intellectual property trends in nanotechnology. The Nanotechnology Patent Landscape Over the past decade, universities and companies have been engaged in an intense race to patent their nano- 5 I c. technology inventions, seeking a source '" o of future licensing revenue and control ~», of an emerging technology. But this .!J C o .~ Steven Yu, MD, is a patent attorney in ! the Asian Practice Group at Kenyon Patenting nanotechnology can be tricky because of its multidisciplinary nature. Shown & Kenyon LLP (Washington, DC). here is a rendering of translucent medical nanobots fixing blood cells. 72 MD&DI • devicelink.com/mddi • November 2007
    • NANOTECHNOLOGY» database for nanotechnology-related items returned more than 4700 patents 1000 with claims containing the following 900 terms: nanomaterial, nanostructure, "C QI 800 nanofiber, nanowire, nanop article, :::J /I fullerene, quantum dot, nanotube, den- ~ 700 - /I - c: QI n:J 600 500 drimer, or nanocrystal (see Figure 1). This thicket of patents can partially be attributed to the complex nature of - Q. 0 L.. QI .D 400 300 nanotechnology itself and to the fact that much of the field is the result of E cumulative innovation, where innova- :::J 200 tions build on many previous-innova- z 100 - -~ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- tions. Because multiple patents from competing groups may cover each in- 0 -.0 t"- e- co 0-- o •... N M -:r It) -.0 cremental innovation to some degree, 0-- 0-- 0-- o o o o o o o •... 0-- •... 0-- •... 0-- •... 0-- o o o o o o o a large number of overlapping patents N N N N N N N is inevitable as complex technologies Year become commercialized. A glance at the businesses that hold the most nanotechnology patents gives Figure 1. The number of nanotechnology patents issued in the United States has in- us some initial impressions about the creased nearly tenfold in the last 10 years. patent landscape (see the sidebar, "Top nanotechnology land grab has resulted patent rights in nanotechnology. As of Five Nanotechnology Patent Hold- in what many consider to be a patent July 2007, a search of the U.S. Patent ers"). One notable observation is that thicket-a dense web of overlapping and Trademark Office (PTO) patent large companies in the semiconductor and electronics industries dominate nanotechnology patenting. Although much nanotechnology innovation may take place in these particular indus- tries, it is important to keep in mind that nanotechnology is fundamentally a multidisciplinary field that overlaps a wide range of scientific and technical disciplines (materials science, biotech- nology, synthetic chemistry, electrical engineering, and physical chemistry, to name a few). Therefore, a patent on a basic nano- technology platform that was origi- nally developed for one industry can affect other industries as well. For ex- ample, a technology originally devel- oped to create nanostructures in semi- conductor microchips may also be used to create nanostructures for microelectromechanical system-based medical devices. A patent on this nano- Slippery technology platform, in addition to covering the semiconductor applica- tion, could also cover the medical de- When vice application even if it was not fore- seen. For a medical device company, Wet this means that relevant nano- technology patent owners are not nec- essarily in the life science and health- care industries-and that there are potentially more players in the field than at first glance. 74 MD&DI • devicelink.com/mddi • November 2007
    • Another notable observation is the unusually large stake that universities TOP FIVE have in nanotechnology. By one esti- NANOTECHNOLOGY mate, about 20% of nanotechnology PATENT HOLDERS' patents are owned by universities, a disproportionately large number con- 1. IBM sidering that universities typically hold about 1-2% of the patents issued in 2. Canon the United States each year.! But even 3. Hitachi this figure may underestimate the sig- - 0, nificance of university-owned nano- 4. University of California technology patents. Because these patents often emerge from basic sci- 5. Olympus Optical ence research, it is likely that university- owned patents protect the core building blocks that are needed to im- egy. When licensing a nanotech plat- plement downstream nanotechnology form to incorporate into a medical de- applications. vice, device firms must always consid- er whether any other patents owned Risk-Assessment Strategies by third parties might restrict the pro- Having a comprehensive view of the posed use of nanotechnology in the patent landscape is vital to operating product. This type of question is typi- in the nanotechnology space because cally answered through a product multiple patents from different clearance investigation (also called a sources may need to be licensed to right to use or freedom to operate), bring medical devices using nan- which involves a search of patent otechnology to market. databases and an analysis of relevant A nanotechnology-based medical patents. device will probably implement mul- Although a comprehensive clearance tiple layers of nanotech platforms. search incorporates multiple search Take, for example, a hip implant with strategies, manufacturers can conduct a nanocomposite coating designed to a preliminary patent search on the improve tissue regeneration around database available at the PTO Web site the implant. In addition to licensing (www.uspto.gov) using potential key- the nanocomposite coating from the words. A search within the PTO nan- supplier, the raw nanomaterial com- otechnology classification (Class 977) ponent of the coating may need to be may also be helpful, but the results licensed from another patent holder, may be limited because this classifica- and the technique for applying the tion was only recently created. Device coating to the medical device may firms can further analyze potentially need to be licensed from yet another relevant patents identified by the patent holder. search to determine whether there are The obstacles presented by this indeed blocking patents, and if so, patent thicket should be addressed whether the patents are valid. Some- early in the product development cycle times a patent is invalid because of a before a firm spends a significant prior publication, such as a scientific amount of money on developing a article disclosing the claimed inven- nanotechnology-based medical device. tion, that was not considered by the A well-planned licensing strategy can PTO during the examination process. help manufacturers avoid a situation If a blocking patent is believed to be in which a company licenses one set of invalid, manufacturers can challenge patents to develop a product only to its validity through a patent reexami- learn later on that more patents need to nation request. be licensed. Anti-Royalty Stacking. If licensing Survey the Patent Landscape. In a a nanotechnology patent, consider hav- field that is dominated by patents, due ing the patent owner share some of diligence and a proper survey of the the risk posed by an uncertain patent patent landscape are critical to a suc- landscape. One way to do this is to in- cessful nanotechnology licensing strat- sist on an antis tacking provision in the November 2007 • devicelink.com/mddi • MD&DI 75